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Fair market value is defined as the price that would be agreed upon in a voluntary transaction between a knowledgeable buyer and a knowledgeable seller, neither being under any compulsion to buy or sell. This concept reflects the true value of a property in a competitive market, taking into account the conditions of the transaction.

The definition emphasizes that both parties involved have enough information about the property and are acting in their own interests, ensuring that the agreed-upon price is an accurate reflection of the property's worth. This aligns with the principles of supply and demand, as fair market value tends to fluctuate based on market conditions and comparable sales in the area.

In contrast, the maximum price obtainable in a competitive market might suggest a theoretical peak that could be reached but does not necessarily reflect an actual agreement between buyer and seller. The lowest price acceptable by a seller focuses only on the seller's minimum expectations without considering the buyer’s perspective. Lastly, the price determined by tax assessors may not reflect current market conditions and is typically based on criteria that might not align with actual marketplace negotiations. Thus, it does not serve as a valid measure of fair market value.